Florida Record

Sunday, August 25, 2019

Lawsuit reflects conflicting 'independent contractor' definition among enforcement agencies

By Nancy Crist | Jan 20, 2017

ORLANDO—A lawsuit alleging USA Transporter Services misclassified workers in an attempt to avoid paying mandatory taxes on their behalf reflects a growing rise in earnings or “wage and hour” disputes in Florida and around the country.

“It’s a 10 to 12-year trend of an increased number of wage and hour claims,’” David Gevertz, an attorney with Baker Donelson who specializes in wage and hour disputes, recently told the Florida Record. “A large part of those claims allege that they were improperly classified as an independent contractor when they were really an employee.”

The Record reported earlier this month that Santiary Rivera and Hector Burgos filed a collective action lawsuit on Dec. 16 in the Orlando Division of the U.S. District Court for the Middle District of Florida, alleging the defendant violated the Fair Labor Standards Act (FLSA) and the Florida Deceptive and Unfair Trade Practices Act.

The plaintiffs allege their former employer misclassified them as independent contractors to avoid paying employment taxes and made illegal deductions from their earnings to pay insurance on company vehicles.

In every industry “there tends to be a push to try to make people independent contractors so (the employer) can hold down compensation while getting more money into the pockets of workers and bypassing all the taxes,” Gevertz said. “The only entity that ends up with immediate harm is the government that is supposed to be collecting those taxes.”

American workers are protected by the federal FLSA of 1938 and by the labor laws of each state. Still, a 2011 study by the National State Attorneys General Program at Columbia Law School showed that standing behind a law is just as important as having it on the books. 

“Without meaningful enforcement by state regulators, employers will simply disregard legal obligations if doing so allows them to save time, money or effort, putting the majority who wish to abide by the law at a significant competitive disadvantage,” the report stated.

A problem inherent with an allegation of misclassification is the lack of a cohesive, consistent definition of “independent contractor” among the IRS, the U.S. Dept. of Labor and the courts, Gevertz said. “As an attorney to an employer, I can never answer with 100 percent confidence that they’ve made the right decision.” This difficulty in pinning down consistent criteria leads to businesses spending significantly more on labor to avoid the risk, or endangering their entire business model by taking a risk, Gervertz said.

Enforcement—or lack of it--affects the worker, their family, and their community, as well as the business that is striving to be legally compliant while trying to survive a competitor’s illegal and less costly practices.

Given the current climate of employment-related litigation, “Employers would be smart, before they end up in the crosshairs of an audit or lawsuit, to hire someone with expertise in this area,” Gevertz said.

“Too often, someone says, ‘All my competitors are using independent contractors. That’s the only way I can stay in business.’ So there’s an assumption that if everyone’s doing this, it must be lawful. Unfortunately, that’s not the case,” Gevertz said.

The plaintiffs are represented by Luis A. Cabassa of Wenzel Fenton Cabassa PA in Tampa.

U.S. District Court for the Middle District of Florida, Orlando Division Case number 6:16-cv-02158








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U.S. District Court for the Middle District of Florida, Orlando Division